Laws, Regulations & Annotations
Property Taxes Law Guide – Revision 2011
Property Tax Annotations
220.0000 CHANGE IN OWNERSHIP
220.0454.010 Original Co-owners. Real property is owned by a limited liability company (LLC). Member A proposes to redeem its membership interest in exchange for an undivided interest in the real property equal to Member A's percentage membership interest in the LLC. The LLC will continue to own the remaining undivided interest as a tenant in common with Member A, and the remaining members of the LLC will indirectly own interests in the real property in the same respective proportions that they owned prior to the transaction through their continued ownership of LLC membership interests.
The transfer of an interest in real property from the LLC to Member A in exchange for Member A's interest in the LLC is excluded from change in ownership under Revenue and Taxation Code section 62(a)(2). As a result of Member A's complete withdrawal from the LLC, each remaining member's membership interest increased. For property tax purposes, this is deemed a transfer to each member of an additional percentage of LLC capital and profits. Because no member will obtain control of the LLC, these transfers are excluded under section 64(a). Additionally, because there is no change in control, there is no need to use the proportional ownership interest transfer exclusion with respect to the increase of the remaining members' membership interests and thus, the remaining members do not become original co-owners under section 64(d). C 7/8/2010.